Sydney Morning Herald political and international editor

Australia hasn't twigged to it yet, but the Abbott government is about to announce the most dramatic changes to the higher education sector in decades.

There have been clues to the coming revolution, a sweeping deregulation that will attempt to emulate the best features of the US system while avoiding the worst.

The federal Education Minister, Christopher Pyne, is expected to announce the new system on or before budget night, May 13.

The changes have not been to the cabinet for discussion, but that's standard in budget season. Pyne does have the support he needs, however, that of his Prime Minister and his Treasurer.

Advertisement

Speculation about the budget's effects on the elderly has largely overwhelmed attention to its potential effects on students.

The changes will be supported by the heads of the elite universities - in fact, a conclave of vice-chancellors has taken to the opinion pages of the newspapers in the past couple of weeks to clamour for change.

It's not a spontaneous surge of support - the government has largely orchestrated the cheer squad - but it is sincere nonetheless.

But the changes will be unpopular with student bodies. Campus visits for Abbott ministers will be spicy. It will be a bracing moment for the government.

Pyne argues that the need for change in the university sector is so serious that in discussions with colleagues he has compared it with the car industry.

The universities, like the car companies, enjoy a protected domestic market and they're heavily subsidised by the taxpayer. Yet they work amid a thicket of regulation and they face rising global competition.

Australia's education exports are suffering. Education is the biggest non-resources export earner. It ranks fourth overall, after iron ore, coal and gold. It dwarfs exports of wheat, beef, wine or manufactures, for instance.

But at their peak in 2009 education exports ranked third. Since then the total value of exports has fallen from $18 billion a year to $14 billion. The strength of the dollar has been a big factor, pushing up the price of study in Australia for overseas students, but exchange rates are a competitive reality for every export sector.

The competitive challenge is real and the stakes are high: overseas students account for one dollar in every five that the sector earns.

But even without any further competitive slippage, Australia's system is straining. One of the cheerleaders for change, Fred Hilmer, vice-chancellor of the University of NSW, wrote this week that Australia's higher education system "is not sustainable."

"We have moved into an era of mass education, but government funding has not kept up with that expansion," he wrote. "Funding per student is declining and has been for 30 years. There seems little prospect that governments now, or in the future, are likely to reverse this."

If this were not enough, the onrushing disruptive force of online education looms. So-called "massive open online courses" or MOOCs are just beginning to assert themselves. They allow overseas institutions to kick down the door of the local universities and offer high-quality courses at very low cost over the internet.

"There are no national boundaries in cyberspace," says Jim Barber, former vice-chancellor of New England University. He argues that Australia is vulnerable to the threat, but can turn online courses into an advantage: "Australia needs to lift its eyes, particularly to the Asia-Pacific where we enjoy a time-zone advantage over North America and Europe and could extend our domestic classes to Asia online in real time via telepresence."

Barber, too, turns to the comparison with the car sector: "If universities are to avoid the fate of the car industry, the best that the government can do is clear the way for them to get on with the daunting and unfamiliar tasks ahead of them."

This is, as it happens, precisely what Pyne has in mind. One of the strongest signs of Pyne's plans was his remark in a speech a month ago to a Universities Australia dinner: "The single most important thing I want to say tonight is to encourage you to embrace with enthusiasm the new freedom that this government plans for the university sector.

"Freedom and autonomy will be the hallmarks of this government's approach to universities. As we reduce the burden of regulation on universities, I would urge you to grasp your destiny into your own hands."

Or, reviving a 1980s line about the centralised command model of Australian higher education, Pyne has told some in the sector that "we will set you free from Moscow on the Molonglo''.

How free?

A second clear signal of the government's intent is the report that Pyne commissioned from former Liberal education minister David Kemp and Kemp's former policy adviser, Andrew Norton.

They were asked to look into the effect of the Rudd-Gillard policy of throwing open the university gates. Under their so-called "demand-driven" policy, unis could enrol as many students for bachelor degrees as they wished, in any course except medicine.

The response was big - they signed up an extra 150,000 students. The cost of funding uni places shot up by 43 per cent over four years, far more than Labor had expected. Instead of costing a little over $5 billion last year as anticipated, the cost came in at $6 billion.

Labor's intention was twofold - to raise the university participation rate, and to make unis accessible to the poorer and less educated. The policy has achieved both aims.

What have Kemp and Norton recommended? That the system is so good that it should not be canned; it should be extended. It should not only apply to universities but to privately run colleges too. The private colleges would win access to the Commonwealth funding that they have never enjoyed.

"The Kemp-Norton report gives broad university entry the sort of tick usually reserved for baby animals and free beer," says Greg Craven, vice-chancellor of the Australian Catholic University. "Their findings refute the dedicated fear-mongering of some that wider access to university undermines quality, admits knuckle-gnawing students and produces rampant halitosis."

Craven, who must be a formidable vice-chancellor if his management skills are as good as his writing, says the effect is that wide-open uni and college gates are "likely to become one of those rare objects of bipartisan support - like basic social security, the existence of an Australian navy, and the Australian cricket team.

"This is not only good sense but sound politics. Voters want their children employed, and graduates to get jobs."

But the key attraction for Pyne of this huge expansion of federally subsidised tertiary places is the competition that would come with it. For the first time, it would put the private colleges on a similar funding footing to the universities.

Or, as Pyne put it in his speech, he seeks "the competition that drives the excellence, diversity and innovation that we need".

Perhaps, but how to pay for this huge expansion of government support?

Here's the rub. The Kemp-Norton report proposes that it would be funded by increasing student fees, cutting the government contribution as a percentage of the total cost of a degree, imposing a flat 10 per cent loan fee on HECS, and removing federal funding support for most postgraduate degrees.

Student bodies will oppose these ideas bitterly. So will some universities, afraid of the new competition from private colleges. The chief executive of Universities Australia, Belinda Robinson, said extending funding support to the halitosis set would pose "a substantial risk to the reputation of the entire sector, with devastating consequences".

Hilmer disagrees vehemently: "But why shouldn't an institution that meets quality standards be able to participate in providing higher education? We accept that private hospitals should coexist with public; we accept private as well as public schools … The prediction that private for-profit institutions would sacrifice quality for profit would seem to ignore the effect of competition and students voting with their feet."

Pyne hopes that the wider competition will drive excellence, which is surely the greatest attraction of the US model.

But what of the greatest ugliness of the US system, excellence that is unaffordable for any but the rich and those willing to bear the most daunting of debt burdens?

Pyne argues that HECS, the great Australian tool of equity, is a safeguard against American-style unfairness. HECS, which allows students to borrow the cost of their degree from the taxpayer at low interest and repay only when they have an income above a set threshold, means that no student is denied an education because of cost.

Pyne inherits $2.3 billion in Julia Gillard's planned cuts to university funding, and is pledged to implement them.

Another of the vice-chancellor cheer-squad, Melbourne University's Glyn Davis, says: ''The question is: do we just take the cuts or is there some scope to lift fees? Do we run down our universities or do we look at other sources of income?

''No one wants to introduce higher fees but the reality won't go away just because it is difficult. We are at an inflection point."

It will be either a defining reform for Pyne or a signal defeat if the government cannot bring it off. His biggest problem may be that, beyond the ranks of university management, is the wider community convinced that there is a problem so serious that dramatic change is the solution? The minister has yet to make the case.

Peter Hartcher is the political editor.

178 comments

Sorry, our cash strapped unis bleating about their straightened times? When they can afford hand made half million dollar chandeliers and tensegrity atria for forty million just so they can exhaust their annual income and not reflect a surplus, the game is afoot. When a Group of Eight (their caps) university can perform a Singapore debacle that costs $200 million, it is not more freedom they need nor more funding. A brilliant academic mind doesn't necessarily make a good manager and inter alia, the frequent harassment, workers compensation, stress leave claims, suggest that university management is an oxymoron in Australia.

Commenter

Troppo

Date and time

April 26, 2014, 8:45AM

And a lot of the well healed vice chancellors are doing everything they can to rein in costs, except cutting their own salaries and curtailing their own junkets.

Commenter

The Genuine Article

Date and time

April 26, 2014, 11:26AM

From the article....

'Perhaps, but how to pay for this huge expansion of government support?

Here's the rub. The Kemp-Norton report proposes that it would be funded by increasing student fees, cutting the government contribution as a percentage of the total cost of a degree, imposing a flat 10 per cent loan fee on HECS, and removing federal funding support for most postgraduate degrees.'

Um, so am I right in thinking that expanded 'government support' for more places, is actually forcing students to fund the places themselves?

This seems totally contradictory and all those measures will only make it harder for low income students to attend uni.

This will be dressed up in all sorts of spin but the aim here is to create our own version of the US Ivy league schools. Centres of excellence, yes, also bastions of privilege that foster social division. The haves, and the have nots.

If this bunch of ideologues weren't so dangerous they'd be laughable.

Commenter

in the land of the little kings

Date and time

April 26, 2014, 12:27PM

Good god....not another case of foxes in charge of the chooks?

Why do we have to now have the students suddenly paying enormus amounts for their education when the baby boomers got theirs for free?......it all seemed to work okay back then, what's the difference now?......I have'nt noticed humans morphing into some other different being, so that they should now be required to pay for their very existance and higher education and healthcare to some other higher being?

Commenter

Ridiculouse

Date and time

April 26, 2014, 12:39PM

Yes, it looks like Abbott/Pyne wants to create our own version of the Ivy League. The question is whether a population of 20 million who are used to having an egalitarian way of life, and a simple slow one at that, wants an American way of life where the rich is lauded, the privileged is envied, a life chasing after a number in a bank account is well-lived and the government is directed by those who lobby the hardest rather than the promises made to the people when they chose the government in an election.

Commenter

Jon

Location

Sydney

Date and time

April 26, 2014, 2:35PM

Ridiculouse, you do realise that the vast majority of baby boomers left school and went to work, don't you? Very, very few had the opportunity to go to University.

Commenter

Julia

Location

Sydney

Date and time

April 26, 2014, 2:51PM

@ Rediculouse +1

classic double speak from the liberals. regulatory freedom = economic slavery through student debt. this is such ignorance from a party whose sole understanding of economics is based on a warped ideological view of self reliance. this basically entrenches the baby boomers never had to pay realistic prices for their education. lets not even mention the fact that the liberals have no plan to create graduate level jobs other than "cutting taxes". as for those vice chancellors who support the idea, they should be ashamed. their only concern is increasing their rankings through research grants, not ensuring that students have opportunities beyond their studies.

Commenter

Stewart

Location

Perth

Date and time

April 26, 2014, 4:06PM

@Graduate, as with many other professions or trades, schools can only provide skills up to a certain point. It is only with hands on experience that you truly cement those skills into work skills. My dad was once a auto mechanic and was responsible for the training of two apprentices, one of whom struggled at school the other was apprentice of the year. The one who struggled in the classes required little supervision, the other required a lot of time (and frequently got it wrong).

Commenter

Wooduck

Date and time

April 26, 2014, 4:38PM

Stewart ....spot on.Julia...yes thats right many baby boomers went straight to work(lucky sods) and others got their free uni........nowadays there's not the full-time employment opportunities for young or old that there was in the 70s.....so many young ones end up at uni trying to get a better chance at a full-time job........sadly for some it's not working...they're still unemployed(thanks NAIRU)......many jobs back then like Nursing(Hospital training)...Teaching(teachers college etc) Policing, Accounting etc etc where not Uni courses ....people where trained on the job in many cases, and in vocational courses in others.....AND guess what?.....many were actually PAID properly while they completed their training, enabling young ones to get married and buy houses etc.......vastly different from today....

Commenter

Ridiculouse

Date and time

April 26, 2014, 4:49PM

@ Troppo, well said.

The already rampant bullying in education workplaces will go through the stratosphere. The Liberals seem to think bullying is not a problem although it costs the economy $36 billion a year.